Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics. A former columnist at the Times of London, the International New York Times and the Financial Times, he is the author of Capitalism 4.0, The Birth of a New Economy, which anticipated many of the post-crisis transformations of the global economy. His 1985 book, Costs of Default, became an influential primer for Latin American and Asian governments negotiating debt defaults and restructurings with banks and the IMF.

I never cease to be entertained by the notion that the world economy is performing well.

Comparing 2016 with 2008, world GDP has grown by $24tn (USD PPP) whereas debt has increased by $84tn. Based on WEF numbers for eight countries, the world as a whole has underfunded pension provision by perhaps $90tn over the same period. Monetary stimulus has been well in excess of $25tn. Savings ratios have collapsed. Growth has occurred in services that we sell each other, but not in hard-currency sectors like manufacturing and construction.

So this is a mickey mouse economy, based on a tide of cheap credit which pays us to "take in each others' washing". Given the sheer scale of monetary stimulus, what should have been happening - long before now - is overheating. That there's no sign of that tells us quite how weak underlying demand really is. Economists obsess about growth in GDP whilst ignoring debt, savings, real incomes and the cost of household essentials - and are then surprised by what happens...

Put this lot together and prosperity is deteriorating. Markets are buoyant thanks to cheap money, a policy adopted because debt is too big to be serviced at normal (positive) rates of interest. There's no chance that rates will rise above inflation any time soon. So markets are in disconnect from the economy.

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